What is dynamic pricing?
Dynamic pricing is a strategy where prices change in real time or on a regular basis based on algorithms that account for demand, availability, time of purchase, customer profile and competitor behaviour.
Airlines have used dynamic pricing since the 1980s. Today it's accessible to virtually any business thanks to SaaS tools and e-commerce APIs.
Types of dynamic pricing
Time-based pricing
Prices vary by time of day, day of week, season. Hotels charge more on weekends; energy is more expensive during peak hours.
Demand-based pricing
Prices rise when demand rises. Uber Surge — more drivers needed = higher price for passengers.
Segmented pricing
Different prices for different customer segments. Students, seniors, premium customers — each pays a different price.
Competitive dynamic pricing
Automated price adjustments in response to competitor price changes. Common in e-commerce and on Amazon.
How to implement dynamic pricing in SMEs
- Seasonality — plan higher prices during peak demand periods in advance
- Early bird / last minute — lower prices for early booking or clearance
- Channel differentiation — different prices online vs. in-store
- Repricing tools — Prisync, Wiser, Omnia for e-commerce
- A/B price testing — test different prices on different segments
✓ Pros
- Revenue maximisation during demand peaks
- Fast market response
- Better capacity/inventory allocation
- Enables price segmentation
✗ Cons
- Implementation complexity
- Risk of customer dissatisfaction
- Requires data and algorithms
- Can be perceived as unfair
Check price elasticity first
Before implementing dynamic pricing — see how your customers respond to price changes.